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Oracle's Blowout Quarter... A Lagging Indicator?

|Includes: Oracle Corporation (ORCL)

In light of the obviously weakening macro data these days (most recently, the latest reports from FedEx and the Philadelphia Fed), I found Thursday night's earnings release from Oracle (NYSE:ORCL) to be suprisingly strong. In that context, how does this headline sound:

"Oracle Reports Net Income Up 111%... Application Sales Up 42%, Database Sales Up 32%"

And how about this quote from Larry:

"We are off to our fastest start in six years," said Oracle CEO, Larry Ellison. "The spectacular growth in our database business demonstrates that we are continuing to take market share from IBM and Microsoft. The world's largest Web sites — from to Yahoo! — rely on the Oracle database to handle huge numbers of users and enormous quantities of information. The Oracle database is the software that powers the Internet."

And how about this quote from the CFO:

"... we are seeing the sales and marketing productivity gains that should accelerate revenue growth throughout [this fiscal year}... It should be a great year."

Want to guess when this press release was from? September 14th, 2000. The stock closed that day at $42.47. On the date of the next earnings release, three months later, it closed at $27.50. In the earnings release three months after that (March 1, 2001) Larry had this to say:

""License growth was strong in the first two months of Q3, and our internal sales forecast looked good up until the last few days of the quarter," said Oracle CEO Larry Ellison. "However, a substantial number of our customers decided to delay their IT spending based on the economic slowdown in the United States. Sales growth for Oracle products in Europe and Asia Pacific remained strong. The problem is the US economy."

The next day, the stock closed at $16.88.

Disclosure: Short SPY; long SDS